Buy Larsen & Toubro Ltd For Target Rs. 1,870 - ICICI Direct
Follow us Now on Telegram ! Get daily 10 - 12 important updates on Business, Finance and Investment. Join our Telegram Channel
Decent operational performance amid pandemic…..
About the stock:
Larsen & Toubro (L&T) is India’s largest engineering & construction (E&C) company with interest in EPC projects, Hi-tech manufacturing and services.
* It primarily operates in infrastructure, heavy engineering, defence engineering, power, hydrocarbon, services business segments
* Infrastructure segment contributes ~45% to consolidated revenue followed by services (~30%).
Q1FY22 Results:
L&T reported decent Q1FY22 results.
* Adjusted standalone revenue up 60.8% YoY to | 13109 crore on low base
* Standalone EBITDA up 76.4% YoY to | 1026 crore with margins improving 70 bps to 7.8% on a YoY basis
* Consequently, standalone PAT at | 750.1 crore (up 166.3% YoY)
* Order inflows came in at | 26557 crore, up 13% YoY
What should investors do?
L&T’s strong order book of | 323721 crore suggest good revenue visibility in coming years.
* We maintain our BUY rating on the stock
Target Price and Valuation: We value L&T at | 1870 on SoTP basis
Key triggers for future price performance:
* Low to mid teen revenue and order inflow growth in FY22E amid pandemic
* Net working capital to sale expected to remain stable at ~22.3% for FY22E
* Focus on asset monetisation to further strengthen the balance sheet and improve return ratios
* Strong b/s, controlled working capital, & strong cash generation
Alternate Stock Idea:
Apart from L&T, in our coverage we also like Siemens Ltd.
* Further penetration of valued added automation and digitisation products & services across segments to drive margins, long term growth
* BUY with target price of | 2390
To Read Complete Report & Disclaimer Click Here
https://secure.icicidirect.com/Content/StaticData/Disclaimer.html
Above views are of the author and not of the website kindly read disclaimer
